Fishermen's Energy Regulatory Process with NJ BPU
On May 29, 2015, the Appellate court upheld the BPU’s decision in Fishermen’s Energy’s Appeal stating:
“…we review the agency's [the BPU’] decision in this case employing our usual deferential standard.…We find nothing unreasonable in the BPU's continuing concern with the lack of reliable, understandable accounting information about XEMC, which was to supply the financing and would be a major project shareholder. The issue was not whether the financial information FACW provided was eventually translated from Mandarin into English; the issue was that the accounting standards used were not adequately explained.”
In summary, the appellate court chose simply to defer to the BPU’s judgment with regard to whether or not Fishermen’s Energy financial partner, XEMC, had been demonstrated to have adequate financial resources to fund the project. Despite XEMC nearly ranking as a Fortune 1000 company, the BPU’s judgment that XEMC could not fund a $200 million demonstration project was allowed to stand. The Board’s ruling on this matter was based on the mistaken representation by staff that XEMC financials had only been submitted in Mandarin and could therefore not be evaluated.
It is Fishermen’s Energy intention to take an appeal to the Supreme Court.
Outlined below are examples of the BPU staff’s flawed rationale used to recommend the approval be denied:
Record Demonstrates Positive Benefits
BPU Staff Claim: “Staff primarily recommends the denial of this project because the record does not indicate that positive economic benefits will inure to the state of New Jersey,” said Deputy Attorney General Alex Moreau during the hearing.
Fact: The BPU consultant, Boston Pacific, concluded: “With documented economic benefits and lower OREC [Offshore Wind Renewable Energy Credit] price, even if FACW’s [Fishermen’s Energy Atlantic City Windfarm] claimed benefits for tourism, environmental impacts, merit order effect, and lessons learned are excluded, the project provides net benefits of $33.4 million. The Project then meets the requirement to demonstrate net benefits to the State as required under the Act.”
Record Demonstrates Job Growth
BPU Staff Claim: “Unfortunately, there has not been any record From Fishermen’s that indicated the number of jobs that this project potentially could create,” said Moreau.
Fact: The BPU’s consultant, Boston Pacific, concluded: “FACW is now guaranteeing the creation of 216 direct jobs during construction and 12 direct jobs a year during operations. FACW’s expenditure and job guarantees mean that its determination of economic benefits and costs during construction and operation of the Project is now credibly documented.”
Record in Fact Demonstrates Financial Integrity
BPU Staff Claim:
“[T]he applicant did not provide financial statements . . . in English. The financials were presented in Mandarin because their business partner owns 70 percent of the project. They were presented under Chinese accounting standards and we did not receive a translation. So staff has found that that failure, that lack of transparency, not only demonstrates a lack of good faith, but it inhibited our ability to independently assess whether the company had demonstrated financial integrity. Even if we accepted the statements under Chinese accounting standards, they were not presented in a manner which would allow the staff to conduct a reasonable due diligence concerning the financial integrity. And staff’s recommendation on this is that we’re entitled to greater transparency, greater good faith, greater candor. And so staff has found on this issue at least and is recommending to the Board that it find the applicant did not demonstrate financial integrity”
“Moreover, the Board is unwilling to ignore FACW’s lack of transparency on this issue. It would be bad policy, not to mention unjustified, for the Board to overlook that the Applicant submitted financial statements in Mandarin; did not submit a translation; did not conduct an audit under U.S. GAAP standards; and did not submit a statement from a global accounting firm attesting to the financial strength of the company. Ratepayers deserve more candor, more transparency and more cooperation”
The assertion by the Board Staff that FACW only provided financials in Mandarin is patently not true. English language financials were provided on December 11, 2012, more than a year before Board Staff made these representations.
Fishermen’s Energy business partner does not own 70%, or any, of the company.
The Board’s own consultant, Boston Pacific, concluded that FACW:
“has the financial wherewithal to fund the Project.”
Fishermen’s Energy had, in the spirit of complete transparency, proposed to go substantially beyond the OWEDA requirement that “the entity proposing the project demonstrates financial integrity and sufficient access to capital to allow for a reasonable expectation of completion of construction of the project” and offered to post a letter of credit or other form of security necessary to demonstrate it had the capital to complete construction of the project.
In response to FACW’s commitment, Boston Pacific stated that:
“FACW is now proposing that all of the required funds for development and construction will be provided in escrow through a letter of credit or other, agreed upon form, by 30 days before the start of construction. By providing all funds needed to complete construction upfront, XEMC has demonstrated that it has the financial wherewithal to fund the project and that financing risk is effectively mitigated. It is our view that FACW’s commitment meets the Act’s requirement that “the entity proposing the project demonstrates financial integrity and sufficient access to capital to allow for a reasonable expectation of completion of construction of the project.”
Documentation for FISHERMEN'S ENERGY REGULATORY PROCESS WITH NJ BPU
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